Study heralds Medicaid expansion benefits as rural hospital closes

States that expanded Medicaid programs using federal funding are reaping economic benefits, a new study finds as the long-running healthcare debate rages anew in Tennessee's legislature.

Tennessee is among 19 states that have, thus far, opted to not expand coverage to those who fall in the uninsured gap between qualifying for traditional Medicaid and being qualified to buy insurance on the federally run exchange.

Arkansas and Kentucky each saw savings and gains in revenue since expanding their programs, according to the health philanthropy Robert Wood Johnson Foundation, which released the second in a series of studies on the economic impact of Medicaid Expansion. State spending on Medicaid expansion grew at about half the rate it did in states that chose not to expand.

The study, which looked at 11 states and Washington, D.C., — several for the second year in a row — found that areas in which states reported savings in the first year held true for the second year, said Deborah Bachrach,partner at Manatt Phelps & Phillips and lead author of the report, who noted that many found the savings increased over time.

Bachrach expects RWJF will continue to track states that expanded to get a sense of the long-term fiscal impact.

On Monday federal officials with the U.S. Department of Health and Human Services estimated 114,000 who would qualify for coverage under an expanded Medicaid program have mental illness or substance abuse issues.

Expanding the program would be "an important new opportunity to fund a bunch of tools” to fight mental illness and substance abuse, such as prescription painkillers, said Richard Frank, assistant secretary for planning and evaluation with HHS. Opioid abuse and overdose is an epidemic that impacts communities across the state.

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Insure Tennessee, a tiered coverage system using federal Medicaid expansion funding, was pitched to the legislature ahead of a 2015 special session, as well as heard in regular session, but Senate committees blocked the proposal over concerns with a variety of issues, including trusting the federal government to keep funding obligations, the program's roots in the Affordable Care Act and questions over whether the next president would keep the federal health law in place.

Rural hospitals around the state — and country — are struggling to keep doors open amid big changes in the number of patients who seek in-patient care, Medicare reimbursements and increases in technology costs. Rural and community hospitals, in addition to provider groups, had looked at Insure Tennessee as a bright spot on what is frequently a bleak horizon.

For instance, McNairy Regional Hospital, a hospital operated by Community Health System's Tennova Healthcare subsidiary, is planning to close on May 18. It faced a "surprise breach" to its plumbing system that was too costly to repair given the hospital's decreased daily census and state of reimbursement, Pamela Roberts, the hospital's CEO, said in a statement to The Tennessean. She said the operating environment is not sustainable.

"Another challenge is individuals without health insurance are more limited in their ability to seek medical care, a problem exacerbated by the lack of Medicaid expansion in Tennessee," said Roberts.

Private supporters continue to rally for the plan to be carried to a floor vote — most recently with a billboard campaign aimed at Speaker Beth Harwell.

Craig Becker, president of the Tennessee Hospital Association, which is not involved in the billboard campaign, said the current environment is a "hard place to run a hospital."

While Insure Tennessee was never pitched as a cure-all, it would have helped hospitals navigate the financial pressures, he said.

The THA has started a new organization, Tennesseans for a Responsible Future, to educate lawmakers and citizens about the importance of expansion and "plight of the (rural) hospitals" so there could perhaps be a successful proposal in 2017, said Becker.

Harwell has said she can't unilaterally bring the proposal to the House floor and alluded to discussions about "creative elements" that may lead to an announcement about an alternative in mid-April.

Reach Holly Fletcher at 615-259-8287 or on Twitter @hollyfletcher.